Marketers may be happy that unemployment is falling, but don’t think for a minute that consumers are going back to their free spending ways. The fact is that new jobs are paying less than jobs before the recession and with employers pushing higher health care costs to employees most middle-class consumers haven’t seen a raise since 2008.
Since the recovery began in mid-2009, inflation-adjusted figures show that the economy has grown by 12 percent; corporate profits, by 46 percent; and the broad stock market, by 92 percent. Median household income has contracted by 3 percent. The economy added 214,000 jobs last month, in line with its performance over the past year. Consistent growth is certainly better than backsliding, but growth is still too slow: At the current pace, it will take until March 2018 for employment to return to its pre-recession level of health.
Updated figures by the National Employment Law Project, a labor-advocacy group, show that about 40 percent of the private-sector jobs created in the last five years have paid hourly wages of $9.50 to $13, and 25 percent have paid between $13 and $20. Those findings are underscored by the new jobs report, which shows that nearly all of the private-sector job gains were in restaurants, retail stores, temporary work, health care and other low-to-moderate-paying fields.
Implications for marketers..
1ne: Consumers still are trying to save money and price is still a major marketing “P” in the mix for brands without strong brand equity.
2wo: Branding has never been more important. Strong brands like Apple and Starbucks can command higher prices because of their strong branding.
3hree: Even when you win over consumers you are going to have to work hard everyday to keep them as customers. Consumers will ditch brands that they feel are unresponsive to their needs.
4our: Get closer to your audience. Forget all the hype around social media for a minute, get out there and watch consumer shop, talk to them via research and ask retailers for detailed insights into how consumers are choosing products.
5ive: Forget mass market. Focus on market niches that can be more profitable.
There are lots of potential explanations for why unemployment keeps dropping without driving wages higher. The number of Americans sitting on the sidelines of the job market is still relatively high, for one thing. You can bet that until wages show real increases, however, American consumers are still going to vote with their wallets. This is true not only for elected officials, but for brands as well.